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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Kalam not taken in by GDP figures
Moots prosperity index concept

New Delhi, June 23
Not the one to be easily impressed by GDP growth figures, President APJ Abdul Kalam today said prosperity of people living in urban and rural areas should be measured to know the country's true economic health.

LSE pockets Borsa Italiana
London, June 23
The London Stock Exchange (LSE) confirmed today it was buying the Borsa Italiana for Euro 1.6 billion ($2.15 billion) in shares, according to a joint statement.


Italian stock market Borsa is seen in this photo. The London Stock Exchange (LSE) confirmed on Saturday it was buying Italian stock exchange Borsa Italiana for Euro 1.6 billion ($2.15 billion) in shares, according to a joint statement. — AFP photo
Italian stock market Borsa is seen in this photo. The London Stock Exchange (LSE) confirmed on Saturday it was buying Italian stock exchange Borsa Italiana for Euro 1.6 billion ($2.15 billion) in shares, according to a joint statement.





EARLIER STORIES

 

IT firm Helios on takeover mission
Chennai, June 23
Helios & Matheson, an IT company focused on healthcare vertical, is on an acquisition spree of foreign companies during the next three months.

Aviation Notes
Turning a blind eye towards disabled
Worldwide, airports and airlines are adequately equipped with medical and other facilities to cater to the needs of the sick and the disabled when they travel on domestic and international routes. Not only this. The authorities have expressly asked cabin crews of various airlines to display consideration and sympathy when such persons are on flight.

Investor Guidance
No sops on securities transaction tax
Q: If I had short-term capital gain of Rs 85,000 and my STT amounts to Rs 5,500 while my other income is Rs 1,00,000, then what will be my STCG tax?

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Kalam not taken in by GDP figures
Moots prosperity index concept

New Delhi, June 23
Not the one to be easily impressed by GDP growth figures, President APJ Abdul Kalam today said prosperity of people living in urban and rural areas should be measured to know the country's true economic health.

"Measurement of GDP alone should not be taken as an indicator of economic development and I have suggested a national prosperity index (NPI)" for gauging the true strength of the economy, he said, while interacting with journalists.

NPI is a combination of GDP, reduction of people living below poverty line (BPL) and the social values derived from age-old institution of the joint family system, he said to a question on GDP growing by over 9 per cent now.

Asked whether he felt fruits of economic growth had percolated to the poorest sections of the society, the President said the benefit of the GDP growth can be taken to the masses by implementing his pet project - PURA (Providing Urban Amenities in Rural Areas).

Kalam said he would be working on the PURA project even after demitting office. "Why can't the amenities enjoyed by the urban people be extended to the rural areas?" he asked.

He asked the media to play a proactive role in the development of the farm sector, the lifeline of over 600 million Indians living in rural areas. — PTI 

Left scoffs at FM’s claim

Ridiculing Finance Minister P Chidambaram’s claim on taming inflation, the Communist Party of India (CPI) today said that the prices of food grains, pulses, edible oil, vegetables and fruits have not fallen.

“Despite the claim of the government that the rate of inflation slipped to 4.28 per cent and GDP growth of 9.4 per cent, the prices of food grains, pulses, edible oil, vegetables and fruits have not fallen. Rather they have been up heaping burdens on common people,” the CPI, which extends support to the Congress-led UPA government from outside, said in a statement here.

The CPI wanted the government not to get carried away by the so-called decline in the rate of inflation and act firmly to control the prices of essential commodities, particularly of food items of the common people.

“Even corporate organisations like Assocham have rebuked the government’s claim. According to their own studies the prices of wheat, pulses, spices, edible oil, meat, milk products and vegetables and fruits shot up by over 25 per cent during January to May 2007,” the party said.“Price rise must be a grave concern for the UPA Government. Public distribution system is still a least priority for the government. The Assocham report talks of hoarding as one of the causes for price rise. But stern actions against hoarding and black markets are not taken,” it said. — TNS

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LSE pockets Borsa Italiana

London, June 23
The London Stock Exchange (LSE) confirmed today it was buying the Borsa Italiana for Euro 1.6 billion ($2.15 billion) in shares, according to a joint statement.

Under terms of the deal, Borsa Italiana shareholders will be offered 4.0 LSE Group Plc ordinary shares for each existing Borsa Italiana ordinary share, the two bourses said.

Based on share prices and exchange rates of June 19 the offer values Borsa Italiana at Euro 1.634 billion and represents a value of Euro 100.7 per Borsa Italiana share.

The board of the combined company would have 12 members, seven from the LSE and five from Milan-base Borsa Italiana.

The LSE board believes it will have "more than sufficient support from its shareholders" for the merger.

The combined worth of companies quoted on the two bourses will be around Euro 3.8 trillion, according to figures at the end of May from the Federation of European Securities Exchanges.

That would make the merged group the first in Europe, ahead of Euronext.

The deal allows the LSE to strengthen its position amid takeovers of European stock markets by US rivals.

In May, the US electronic stock market Nasdaq made a friendly offer worth $3.7 billion (Euro 2.76 billion) for Nordic exchange operator OMX aimed at creating the world's second-biggest exchange. — AFP

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IT firm Helios on takeover mission
Arup Chanda
Tribune News Service

Chennai, June 23
Helios & Matheson, an IT company focused on healthcare vertical, is on an acquisition spree of foreign companies during the next three months.

The $100 million company based here has already acquired six IT healthcare companies over the last six years and is now eyeing three companies abroad.

Talking to The Tribune, Helios & Matheson CEO and managing director G.K. Muralikrishna said: "Through our carefully chalked out acquisition strategy we intend to turn our firm into a $500 million company within the next year.

"We are at present negotiating with three IT healthcare companies - one in Europe and two in the USA - for a possible takeover within the next quarter. Each company will cost us between $45 million and $60 million."

Asked about the funds for the takeover bids, he replied that the 16-year-old company had $27 million in cash at its disposal and its yearly accruals were around $18 million.

Muralikrishna said: "Last year we raised $25 million through foreign currency convertible bonds, which was a resounding success in view of our strong and predictable revenue steams. The entire proceeds will be used to fund our infrastructure development and strategic acquisition plans."

He observed that the growth in IT healthcare industry worldwide was around 12 per cent whereas Helios was growing at a pace of 50 per cent each year.

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Aviation Notes
Turning a blind eye towards disabled
by K.R. Wadhwaney

Worldwide, airports and airlines are adequately equipped with medical and other facilities to cater to the needs of the sick and the disabled when they travel on domestic and international routes. Not only this. The authorities have expressly asked cabin crews of various airlines to display consideration and sympathy when such persons are on flight.

In contrast, sadly, neither airports nor airlines in India have sufficient manpower or facilities to look after the sick and the disabled. During recent months, quite a few persons have died for want of prompt medical aid while travelling. The disabled have been shown scant respect on flights.

This apathy shows that the boom in civil aviation has not yet begun regardless of futile claims made by the minister and the ministry. The AAI and the airlines, particularly national and private, have to learn to display consideration to children, senior citizens, sick and the handicapped instead of treating them rudely.

Recently, a disability activist Rajeev Rajan was unjustifiably denied an entry into aircraft by the arrogant staff of Air Sahara, now under the wings of the Jet Airways.

The more Rajan pleaded that he was a regular traveller, the less Sahara-Jet was willing to accommodate him. As if this was not enough, the inconsiderate ground staff summoned policemen.

Rajan was not on a joy-ride. A patient of cerebral palsy, he was going from Chennai to Delhi for an important meeting with the National Trust, a government body.

Spicejet was approached to carry him, but officials declined. In a clarification, Spicejet says: "The passenger did not approach us. Rather Air Sahara approached us to accommodate him. But since we do not have an interline passenger agreement with Air Sahara, we had no option except to turn down the request". The Director-General of Civil Aviation (DGCA) is conducting a probe into the matter. 

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Investor Guidance
No sops on securities transaction tax
by A.N. Shanbhag

Q: If I had short-term capital gain of Rs 85,000 and my STT amounts to Rs 5,500 while my other income is Rs 1,00,000, then what will be my STCG tax?

— Joshi

A : No tax concessions are available on STT (securities transaction tax) unless the dealings in securities is your business. The income chargeable to tax, in your case, will be Rs 1,95,000 and the tax will depend upon whether you are a senior citizen and your gender. For example, the basic exemption limit for non-senior ladies is higher at Rs 1,45,000.

Joint property

Q: Recently, I purchased a house in my name. My wife and I have taken a joint loan for it. If she pays half the EMI, then will she be eligible for the interest as well as principal deduction under Section 80C?

— Manjure

A: Both of you could have availed the deduction individually had the house been purchased in joint names. Now, the house belongs to you, so even though the loan is in your joint names, your wife will not be eligible for the deductions.

Tax on gain

Q: I purchased a house in 1998 for Rs 4.5 lakh and now I want to sell it for nearly Rs 9 to 11 lakh. Please inform me (i) tax implication, and (ii) investment to avoid the same.

— Bhowmik

A: The long-term capital gain (indexed) is taxable at the rate of 20 per cent (plus surcharge at the rate of 10 per cent, if applicable) and education cess at the rate of 3 per cent.

The tax on all long-term capital gains, which are chargeable, can be saved by investing the amount of capital gains in infrastructure-related bonds of NHAI or REC under Section 54 EC within six months. The lock-in period is of three years. The current interest rate is around 5.5 per cent and is fully taxable.

The assessee may claim exemption under Section 54 by purchasing a residential house within one year before or two years after the date of sale of the old house. Alternatively, he may construct a residential house within three years after the date. Section 54 requires the amount of capital gains to be reinvested in purchasing another house. This house has a lock-in period of three years. Sale within this period entails the loss of exemption claimed earlier and the corresponding capital gains is treated as taxable LTCG during the year of sale.

The amount which is not invested before the filing of returns for the year or statutory last date for filing the returns, whichever is earlier, is required to be parked in ‘Capital Gains Account Scheme’ with a bank in India.

Global income

Q : I am an US citizen and have all my investments abroad. I plan to spend more than six months in India with my children. In such a case, will my status change to that of a resident? I will not be in India for business or employment but only for leisure. Also, I have no income from India. Even so, will I have to declare my global income to Indian tax authorities?

— Raghu

A : The residential status is decided by the person’s stay in India and not by your status (PIO etc) or the extent of investments abroad or whether you are in India for employment or otherwise. As per the law, global income of a resident becomes taxable in India. So, yes, you will have to disclose and pay tax on your global income. However, in case you are being taxed in the USA also, you can definitely take shelter under the Double Tax Avoidance Agreement between the USA and India.

PPF account

Q : Both my wife and me have PPF account for 16 years, which has already been extended twice. How long extensions should be continued?

Does dividend reinvested under the dividend reinvestment scheme of MFs attract entry load?

Does MFs investments under SIP scheme attract entry load for every instalment - monthly/quarterly?

— Kartik Shah

A : You may continue the extensions as long as you like. If you do not invest after any extension, you may withdraw the money anytime you need, till then the corpus keeps on earning 8 per cent interest. Even if you invest, you can withdraw 60 per cent of the balance at the end of the previous five year extension. So, you can choose any of the above options.

Dividend reinvestment does not attract entry load. On the other hand, SIPs do attract entry load.

RNOR status

Q: I am an NRI since July 2001 and wish to return to India this year in August. During these last seven years, since April 2001, I have lived in India for 290 days. As per my understanding, I can maintain RNOR status in India for one year. Kindly confirm.

— Yasavant Vats

A: Based on the details provided by you, it seems that you have been an NRI for six years. In 2007-08, you will return to India which will make you a resident in that year. Since you have not been out of India for more than 730 days in the past seven years, the status of RNOR will not be applicable to you.

Proxy purchase

Q : I intend to buy a new house in my wife’s name but my CA advised me against it. According to him, applying my own fund to buy an asset in the name of spouse would create tax difficulties. What kind of difficulties will I face if I go through this transaction?

— M J Narang

A : The difficulties are in terms of who will pay tax. On one hand, the house belongs to the wife, she is liable. However, it is financed by the husband, so technically he is the owner. Also, the ITO can hold that when it was bought, it was out of the money gifted by the husband. Hence, clubbing provisions will apply. In the meanwhile, if the house has been given out on rent, all rental income would be added to the husband’s income.

To avoid all this mess, it is always better to use your own funds to buy assets in your own name. If part of the house is financed by a loan, then as per the amounts involved, the house can belong to both husband and wife.

The authors may be contacted at wonderlandconsultants@yahoo.com

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